Brita

Marketing Management

Case Write-Up

BRITA

Table of Contents

INTRODUCTION 2

CURRENT SITUATION 2

CURRENT ISSUES 3

MARKETING PLAN 3

SWOT ANALYSIS 3

PRODUCT POSITIONING 6

PRICE 9

PLACE 10

PROMOTION 11

CONCLUSION 16

Introduction

Brita has been a leading brand in the filtered water since 1988. Brita was marketed in the US by Clorox. Brita was licensed by Clorox from Brita GmbH, a German company in 1987. Under the license agreement, Clorox would buy filters from Brita and the first Brita product was a pitcher water filter.

As of 1999 over 17 million Brita pitchers were sold in US and the Brita brand was generating over $ 200 million revenues in a year, an estimated 13%-15% of the total US households were using a Brita Pitcher and Clorox held a 70% market share of the total market.

Current Situation

In 1999, PUR, Clorox's competitor, launched a different water purification product, which is a filter that screwed onto kitchen faucets. PUR was a small firm in the industry, however were the only comparable competition to Clorox and was a possible take over target by other major consumer products companies such as P&G. Clorox had its own version of faucet mounted filters ready to launch and was debating if it has to launch the same. The plan was to sell the faucet mounted filters at a deficit to build the customer base, which would then provide a steady stream of revenues through the sale of filters. This model was very successful in the case of the pitcher system.

Current Issues

Brita was a strong contender in the pitcher market and was a new entrant in the faucet filter market, a market in which PUR was the early entrant. There was a fear that the introduction of the faucet filters would slow down the sale of pitchers and the associated revenue from the filters. The company had to continue to pay the royalty to Brita GmbH for the use of the brand name. The faucet filtered water did not taste as good as the pitcher filtered water and Brita had established the brand based on its value proposition of superior taste as compared to any other form of water.

Marketing Plan

The following marketing plan is a response to the current situation and the addresses the current issues, analyzes the strengths, weaknesses, opportunities and threats created by the current issues. This plan details the positioning the new faucet mounted system and discusses the 4 P's viz. Product, Price, Place and Promotion. The document also provides a possible execution for the promotion strategy.

SWOT Analysis

Strengths

* Market leader of table-top pitcher (83%) and filter (75%) in 1998

* 80% of pitcher users were still using it a year later

* Exponential growth in filter sales

* Pitcher delivers water that tasted better

Brita is the market share leader of the pitcher system and filters. Brita's market share of the pitcher ranged between 75% and 83% from 1992 to 1998. Brita's market share of filters was 75% from 1996 to 1998. The filter sales have increased exponentially due to the continued use of the pitcher. Market research indicates that 80% of the pitcher buyers were still using the pitcher a year later. The average user buys 2.5 filters per year. The pitcher system removes water hardness and delivers crisper tasting water with lower pH.

Weaknesses

* Pitcher filter treats only chlorine and lead but does not remove microorganism and other chemicals

* 3% to 4% royalty to Brita GmbH for filters

* Twice the cost of faucet-mount filter when comparing dollars per gallon

Filters for the pitcher system treats only chlorine and lead but not remove microorganism or other chemicals such as pesticide, herbicide, benzene, and trihalomethane. The pitcher filter treats less water than faucet-mount system and therefore, costs roughly twice as much when comparing in dollars per gallon treated. Another weakness is that Clorox needs to pay a 3% to 4% royalty depending on sales to Brita GmbH for using the Brita name on any type of filters, although it might not buy the faucet filters from Brita GmbH.

Opportunities

* High percentage of people with concerns about the quality of tap water

* Growth of water treatment device used in homes (27% to 38%)

* Faucet mount system may increase likelihood to buy Brita product

Based on marketing research, 72% to 75% of consumers have concerns regarding of the quality of tap water. The young adults are more concerned (89%) as compared to seniors (56%). Survey also indicates a growth in the use of water treatment device from 27% in 1995 to 38% in 1999. The increase is primarily due to the increase use of pitcher system indicating there is still growth potential in pitcher system. Another opportunity is that the faucet mount system may increase likelihood of buying a Brita product.

Threats

* Faucet-mount system may disrupt pitcher sales

* PUR and Teledyne plans to heavily advertise their faucet-mount systems

* PUR's and Sunbeam's pitcher filter can remove microorganism

* Rubbermaid's pitcher filter lasts longer

* PUR is a takeover target by P&G, which could